Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Nathan Parcells
Last week our company hit two major benchmarks, we closed a $400K angel round with the investors we wanted to have involved with our company, and we got an article on TechCrunch to announce the round.
The TechCrunch article generated a rush of new traffic, messages from old friends and acquaintances, and a slew of emails from spammers as well as industry leaders looking to do business. While it feels good to get recognition for hard work, the most interesting story is the long and winding path which ultimately led to a successful capital campaign.
Totally F-ed
We first started pitching InternMatch’s angel round, just over 9 months ago and with about 3 months of runway left in the bank. To say that we underestimated the length and time suck involved with the fundraising process is an understatement.
When we started pitching, we already had some interest from our current network, but we wanted to get bigger name investors on board. It was when we first started pitching these institutional investors that we realized that our execution, know-how, and business model wasn’t up to par. Most of the assumptions we made, from the potential of association partnerships for distribution, to our low price point, to our lack of a nuanced plan for SEO, were ripped apart. These first meetings were equivalent to getting kicked in the face.
It is incredibly tough to put emotional energy and preparation into early meetings and ideas, only to learn you are at the base of a mountain that you will need to climb. Having a great team, supportive mentors, and an understanding that it isn’t just Google who got turned down time and again before raising money all help. Multi-month rejection seems to be the fairly standard for successful first time entrepreneurs rather than an outlier.
Blowing things up:
The NOs did a lot of great things for us, they brought scary weaknesses in our business to the surface, they forced us to network and meet new people, and they forced us to find experts to help us better understand the areas of our business that people were attacking.
We had to transform the bigger vision of what we as entrepreneurs were set on creating, into the constraints of selling that vision. We had to make some major strategic decisions and pivots that would change our business forever.
During this time period we started meeting with our advisory team once every two weeks, it was an incredible commitment on their end, and helped us talk through some of the bigger ideas, as well as stay cool and on course.
You will lose some paint:
At one point Scott Hannan (who recently sold his startup to Facebook), who has been an incredible advisor to our company, told us part of this process means you are going to lose some paint. We were exploring big new ideas, we were spending a huge portion of our time raising money, and we had a working product online being used by students, and paying customers.
The only real strategy to stay afloat in times like this is to focus on whatever is most important now and do your best to satisfy everyone else with spare moments. It’s painful to work really hard to acquire some new customers and then not be able to attend their needs (instead dedicating hours to re-writing financials for angel pitch #25), but it is the way the process must work. If any customers end up with a less than ideal experience, you can make up for it later, the alternative is there won’t be a later.
A turning tide:
Eventually after about a gazillion meetings, our business got better, we got better, and money started coming in. It is incredible how quickly the tide can tip once you reach the right formula for your business. Like climbing to the top of a mountain you spend hours exerting muscles, and pushing your endurance and testing yourself, and then at one point you break out of the woods and you are there. A little more grizzled, a lot more knowledgeable and more prepared for the next mountain that is quickly approaching.
If there is anything we could have done much better and differently, it would have been to start pitching earlier. No one wants to pitch an unfinished product, but there is no better feedback than after asking someone what it would take to get them to cut a check for your business.
